All political parties did not rule out that we might need to look at VAT.

Nick Clegg, BBC Radio 4 Today programme, 24th June 2010

'The leadership has an undisclosed policy to announce a VAT rise to 19.5% in the June emergency budget.... We will say that having taken power and scrutinized the finances, we now realise the size of the problem concealed by Darling/Brown and are forced to take this drastic action to tackle the debt.... A Tory spokesman described the claims as 'complete rubbish', adding: 'We have no plans to raise VAT.'

Saturday, June 26, 2010

Last week I heard the new Tory health minister defending the abolition of a raft of health targets as heralding the dawn of a new age of local accountability over the preceding era of national control. Not for the first time, I'm scratching my head to understand the logic behind the typically grandiose statement.

Three of the key national indicators to be scrapped are the 48 hour wait to see your GP, the 4 hour wait in A&E and the promise of treatment within 18 weeks. None of these seem to be controversial matters and are consistent with the sort of targets common in the private sector.

The Tories promise that citizens will be able to hold public services to account, but how will they judge performance? Every business operation has some method of performance measurement, because it has been accepted for years in management that if you can't measure it, you can't manage it.

And within this lies the truth about the future of the public health system in this brave new Conservative world, although it applies just as much to the rest if the public sector, who are being freed from the restraining hand of targets - or being let loose to run unmonitored and unaccountable, depending on your view.

The targets are going not because they hold healthcare back - the evidence is the reverse - but because they reveal performance and the Conservatives know that despite Cameron's supportive rhetoric, the NHS is going to be subject to ideological roll back as well.

Tune to dust off the Major government's Patients' Charter? That 18 month treatment promise might start to look attractive if Lansley gets his way.

Friday, June 25, 2010

Simon Hughes draws a line in the sand and declares that should the coalition government (props D Cameron and N Clegg) decide to cut the benefits to pensioners - Winter Fuel Allowance and the rest - he will rally the might of the Liberal Democrat parliamentary party (those not on the payroll or angling for a position when somebody else jumps ship) to fight these proposals. Given that this comprises an entire gundeck of loose cannons who hold more terrors for their own party than for the opposition, this is hardly the most worrying prospect for the leadership, not least because Hughes has more chance of herding cats than forming an effective guerilla alliance with that lot as the strike force.

As shrewdly as they have used the Liberals as human shields, the Tories have seduced them into government, with 40% of the Liberal Democrat MPs having some formal role in the coalition, thus ensuring that they can't escape and claim to be innocent passengers on a ship of state hijacked by a mad, piratical crew of free market ideologues. That is why they have been appointed as fully-fledged officers with responsibility for punishing the lower ranks. If the Osborne gamble with our future does go wrong, blame is spread amongst the guilty men. And when you have Prof David Blanchflower, Paul Krugman and Will Hutton all sounding alarm bells, then failure looks like a serious possibility. Not that this will faze the Cabinet much, as the overwhelming majority are millionaires - a fact that makes Cameron's refusal to accept the Prime Ministerial pension utterly meaningless as an example to others - if not just simply insulting and patronising.

But the upshot is that as the leader of the Liberal Democrat internal opposition, Hughes has laid down a marker. You can hammer the poor, the sick and the unemployed, you can slash public services and cut benefits. You can risk dumping the country back into the depths of a recession, but don't you even think of touching the pensioners' bus pass. I suppose that by the time we get to 70 and can retire, then that's the least they can do. And I do mean the least.

Cameron and Osborne have very shrewdly shoved Clegg and Cable out as the vanguard of the Regressive Coalition, ensuring that at the least, the public associate the pain of the cuts with both parties and at best, they may even put much of the blame onto them. You wonder if Cameron took advantage of the parliamentary camera angles on Tuesday to conceal himself behind Osborne and let Alexander and Clegg bracket the Chancellor on the TV screen. Cameron has even managed to absent himself for a summit in Canada, ensuring that the picture show him bestriding the world stage and not answering questions about his government's attempts to accelerate the country into depression.

You have to admire the genius of the strategy just as you admire the willingness of the Poor Bloody Infantry of the Liberal Democrats to keep on going over the top whenever the donkeys at Conservative GHQ send down the order.

From Clegg's disastrous performance on the Today programme and an earlier poor showing on the Breakfast sofa to Vince Cable's distinctly uncomfortable appearance on Question Time, the Tories are letting the Liberal Democrats take the heat. Even the cuts are being led by Danny Alexander and Clegg's Sheffield took a beasting as part of the process. The only one with his head above the parapet this week has been Osborne, who is so disliked on sight by the public that he is hidden away from them during campaigns. Even the 'Meet the People' show on the BBC yesterday had Clegg and Cameron doing their double act - Cameron wasn't going to allow all the ordure to land on him.

All this is designed to keep Cameron as shielded as possible, for he is believed to be their unique selling point. This is the New Politics - the Liberals take the pain, Cameron will take the credit.

Thursday, June 24, 2010

John Humphrys used the big interview slot on Radio 4's Today programme to deliver a masterclass in forensically dissecting a dissembling politician in the form of Nick Clegg. He was not allowed to get away with the trite, prepared lines about the deficit being worse than expected or the budget being progressive. He even tried to dismiss the report from the highly-respected and avowedly independent Institute for Fiscal Studies, which defines the budget programme as regressive. Every time, Humphrys challenged assertions with awkward facts and every time, Clegg floundered and flailed as the interview failed to follow the script that he expected.

It is well worth listening to it on the Today website, to hear a master interviewer at work. If you have the stomach to listen to the sound of a man drowning in his own spin.

Tuesday, June 22, 2010

And so Osborne delivered his budget, flanked by a matching pair of nodding poodles in the forms of Clegg and Alexander. And as forecast, he put the boot into the poorest in our society as part of a budget that the Office of Budget Responsibility admits will increase unemployment, increase inflation and cut growth. Great work, Chancellor.

While it is true that increasing the tax allowance will take 800,000 people out of the tax system, that ignores the fact that for a third of the population, the tax allowance change is meaningless because they earn less than the current allowance. Similarly, freezing the council tax has no benefit for the poorest in society, because they do not pay it. Teresa Perchard from Citizens' Advice notes

"The reality is that the proposed changes to personal allowances will be of little benefit to working families on the lowest incomes who live in rented accommodation. Although these families are in work, they are also likely to be in receipt of housing and council tax benefits and since both are means tested, any rise in take-home pay will result in a loss of entitlement to these benefits"

Philip Hammond, the former shadow Chief Secretary, had the nerve today to describe VAT as a progressive tax and Vince Cable - who should be ashamed of himself - popped up to defend the budget as something of which they should be proud. Vince, working overtime to destroy the considerable reputation that he had built up, then announced that the rich pay more in VAT than the poor. If you look at total tax take, that is of course true, but it is not proportionately true. Yet they are the ones who will be affected by the increase in VAT, because the bottom 10% in society pay proportionately more than the top 10%. In fact, the richest people pay £1 in £25 in VAT, but the poorest pay £1 in £7 in this regressive tax.

And then we come to benefits. In a sneaky little move, benefit increases have been linked to the CPI inflation figure rather than the current, higher RPI, so over the next few years, people who rely on benefits will see their incomes drop. Osborne is also promising other, as yet unspecified, reforms to the system, driven by a desire to take money away from the scroungers, not to support those in need, hence a refocussing on disability living allowance as well - more detail on that here.

Fiona Weir, Chief Exec of Gingerbread: A family having a second child could be over £1,200 worse off this year. These cuts will really hit families with young children hard."

The tax credits system is also tampered with, as Hopi Sen spotted some stealth cuts

The disregard for in year income changes is plunging, which anyone involved in the history of Tax Credits knows will mean a lot of people who just got a better job getting letters from HRMC demanding the return of monies paid out. There’s also less going to parents of very young children – which by itself accounts for half as much saved as from no increase in Child benefit. There’s also going to be a disregard for income falls, so if your income falls by £2,5o0 in a year, you get nothing extra in compensation. Oh, and just in case you’re wondering – very little of this comes from those on over 40k, c£150 million or so, about 5% of total savings.

And all of this is before we even see how departments are going to cope with 25% budget cuts.

I so want to be proved wrong on this, but I do get the feeling that a second recesson is on the cards. In the meantime, let's try to find out what has changed in the past 50 days to get Clegg and Co to reverse two of their key policy stances. Not even to an abstention status, but full-throated support for the Conservatives and Danny Alexander pushing himself to the front and simply begging to be allowed to put his axe to work.

I was stunned to see George Osborne announcing in interviews that the alternative forecasts from the new Office of Budget Responsibility demonstrated a failure by the last government. Is he really so economically illiterate that he cannot tell the difference between two different forecasts and actual data? Possibly, he is. And judging from a halting performance by Danny Alexander on the PM programme, the Chief Secretary is no better and isn't even taking advice from David Laws on the matter. Little Danny's main argument rested on the fact that the Labour growth forecast was higher than all but one other independent prediction - which is interesting, but hardly conclusive.

You see, despite all the spin from the Osborne/Alexander team, things actually aren't as bad as they are suggesting. There's certainly no evidence to support claims that things are substantially worse than expected now that they have got their sticky little fingers all over the Treasury books. Even arch-Conservative Fraser Nelson has had to admit that the figures are better than expected

Unemployment, inflation, the deficit – everything is better than not only the Treasury forecast but better than the market had been preparing for. (And Citibank, which compiled the graph, thinks things will get better still – because the economy will keep surprising in the upside).... Manufacturing, house prices, gilt yields – on almost every metric you can think of, things are not as bad as had been feared

The BBC's correspondent, Stephanie Flanders reported this interesting snippet from the launch that her colleague

Paul Mason was able to get Sir Alan [Budd] to confirm that [the] 2015 figure means that the OBR does think that Labour's policies would have eliminated alarge part of the structural deficit by the end of the next Parliament. The OBR expects it to go from 8.8% of GDP in 2009-10 to 2.8% in 2014-15.

So - by the test laid down by Osborne - Darling's policies would have worked. There was no need to impose extra cuts for the sake of machismo and no need to be more brutal than Labour would have been in raising tax and cutting spending. That hasn't stopped the Tories rolling Norman Lamont around the media studios - a man rated as one of the worst chancellors we've ever had and who lost the right to have his comments taken seriously almost two decades ago.

In the other, sane corner, we have the Nobel economics laureate, Paul Krugman with a simple prescription.

Spend now, while the economy remains depressed; save later, once it has recovered. How hard is that to understand?

His comments apply to the US, but he specifically adds that they have international resonance.

Right now, we have a severely depressed economy — and that depressed economy is inflicting long-run damage. Every year that goes by with extremely high unemployment increases the chance that many of the long-term unemployed will never come back to the work force, and become a permanent underclass. Every year that there are five times as many people seeking work as there are job openings means that hundreds of thousands of Americans graduating from school are denied the chance to get started on their working lives. And with each passing month we drift closer to a Japanese-style deflationary trap. Penny-pinching at a time like this isn’t just cruel; it endangers the nation’s future. And it doesn’t even do much to reduce our future debt burden, because stinting on spending now threatens the economic recovery, and with it the hope for rising revenues

He even debunks some of the comparisons being bandied around as justification for slashing cuts now.

Canada 1994-1998: Fiscal contraction took place as a strong recovery was already underway, as exports were booming, and as the Bank of Canada was cutting interest rates. As Stephen Gordon explains, all of this means that the experience offers few lessons for policy when the whole world is depressed and interest rates are already as low as they can go.Denmark 1982-86: Yes, private spending rose — mainly thanks to a 10-percentage-point drop in long-term interest rates, hard to manage when rates inmajor economies are currently 2-3 percent.Finland 1992-2000: Yes, you can have sharp fiscal contraction with an expanding economy if you also see a swing toward current account surplus of more than 12 percent of GDP. So if everyone in the world can move into massive trade surplus, we’ll all be fine.Ireland, 1987-89: Been there, done that. Let’s all devalue! Also, an interest ratestory something like Denmark’s.Sweden, 1992-2000: Again, a large swing toward trade surplus.So every one of these stories says that you can have fiscal contraction without depressing the economy IF the depressing effects are offset by huge moves into trade surplus and/or sharp declines in interest rates. Since the world as a whole can’t move into surplus, and since major economies already have very low interest rates, none of this is relevant to our current situation.

Paul Krugman is scared.

Osborne has an opportunity today to reshape the public sector in a way that no other Conservative chancellor has ever been given. The narrative is that the economy is in crisis and that the fix is to cut public spending - even though there are strong arguments against that policy. What Osborne can do is to make ideological cuts primarily designed to reduce the size of the state, with cutting costs a secondary effect. But he only has this one chance. The honeymoon period is already ending and the positive political capital is being expended. If he doesn't wield the Thatcherite axe now, he may never get the chance again, so Paul Krugman isn't the only one to be scared out there. If Osborne gets this wrong, then we could see the UK plunged back into a recession far darker than the one that Labour guided us through.

Monday, June 21, 2010

The art of opposition: speed kills, seize opportunities, never stop punchingSix weeks in, and Tom Watson MP is emerging as the leading anti-government stormtrooper. His latest assault is a series of Parliamentary questions and freedom of information requests, which have forced the government to reveal that it has spent nearly £18,000 on re-stocking the government wine cellar since the election.

Tom is indeed making a new name for himself in opposition, using all the tools that he possesses to harry the enemy and cause them trouble. He's been digging away on salaries and pensions, SPADs and other things to boot and will continue to gnaw away at them like our own, rather more house-trained Guido Fawkes.

In opposition, you can behave like a government in waiting, ready to step in and undo the mess of the current shower. Or you can understand that we aren't going to be back in power by the autumn and we need to dig in for the coming months and years. It is attritional, guerrilla warfare, using any and all means at our disposal to wind up the government and expose them. Speed is the essence - spot the opportunity and exploit it with everything we have while it lasts, then move on to the next target. Keep up the pace, keep moving and keep attacking. The honeymoon will not last and we cannot afford to sleep until the coalition falls apart.

We need a leader comfortable with that aspect of politics, but capable of switching across into prime ministerial mode when the moment demands - for that time will come again, of that I am certain. But for now, we need someone prepared to get their hands dirty with the hard graft of rebuilding Labour in opposition as the foundation for Labour in government.

Although Chris Huhne's marital trouble has been the main subject of headlines this weekend, a more tragic story lurks just out of sight. The Tory MP David Ruffley was injured after falling under a train on the London Underground and it has been widely reported as a suicide attempt. Jerry Hayes writes movingly about how for all the whiff of power and the excitement and intrigue of politics, the Mother of Parliaments can be a very lonely and emotionally destructive place.

Because all politicians have to wear a mask of supreme confidence, strut the stage with absolute certainty, show no sign of weakness, be beyond reproach and have the sex life of the Queen Mother, the Commons appears to be the perfect comfort blanket. But don’t be fooled. The disneyland of pretence is the order of the day, because baring of the soul to parliamentary colleagues is like cutting your finger in a shark tank.Oh, how I wish that the dapper, chirpy little man I used to seat next to had confided in me that he was in deep financial trouble. It may have saved me from reading about his sealing himself in his car with a bottle of whisky and the exhaust hose, and attending his memorial service with his bewildered widow and tearblown children. Oh, how I wish that the tubby Labour MP I used to drink with had told us that he was gay and was being unmercifully bullied by other MPs. I wouldn’t have had to had to read of his distorted body being found with a noose round his neck. Oh, how I wish that the convivial Tory I used to enjoy dinner with had told me that he was desperately unhappy. I wouldn’t have had to read of his body lying unloved and unattended for three days. We didn’t even notice that he had gone missing for three weeks.

Perhaps we find it hard to be sympathetic towards those who choose politics as their vocation, but we should remember that some pay a terrible price for it.

Sunday, June 20, 2010

David Willetts positively threw the cat out of the bag on the Politics Show this week in confirming that the Forgemasters loan cancellation was a policy decision, not a financial one.

Quite aside from his confirmation of budget measures coming up this week - matching the trails in the press this weekend - which would, as guest Peter Bazalgette pointed out, have led to resignations in an earlier age, he affirmed that government should not be involved in financing private firms and that if the scheme was any good, then it should be supported by corporate borrowing. So far, so Thatcherite free-market. Of course, that isn't the reason that has been cited elsewhere - where Tories and Liberal Democrats (indistinguishable as they currently are) have been lining up to blame the last government for making unfunded promises.

Where this leaves the bank bailouts - massive sums given to private companies to prevent the total collapse of the British banking system - isn't clear. You could make a strong argument, as Labour rightly did, that this intervention was justified in the national interest, although I seem to recall some Conservatives opposing that at the time. On a much smaller scale, the argument about the national interest can also be deployed here, particularly when you consider how difficult it is to obtain £80 million on the corporate market.

It has to be restated that this wasn't a grant, but a loan that would be repaid with interest. It would have directly created 180 manufacturing jobs in Sheffield and supported other trades and retailers in the city and beyond. When we come to build the next generation of nuclear power plants in this country - which Tory policy says we will and the Liberal Democrats will not actually do anything concrete to oppose - we will be buying steel parts forged by one of two suppliers in Japan or South Korea, not giving more work to British employees. This is a specialist niche market where a British company could be taking a global lead for a small initial investment by a government committed to supporting manufacturing industry with more than just a few words.

Hidebound Tory ideology has stopped Forgemasters moving forward and Nick Clegg should be ashamed of his part in this. In an interview yesterday, he said that the decision was "very tough for me personally." No it wasn't Nick. You have your salary as an MP, your huge majority might even allow you to survive at the next election, although I sincerely hope not, and you have your ministerial perks and salary to see you through. If all else fails, perhaps your new Tory mates will offer you a chicken run to a safe Conservative seat. Let's face it, you have sold your party and your principles for only a semblance of power, so crossing the floor would be a doddle.

That's if they don't abandon you like they have abandoned the people of Sheffield.

Thursday, June 17, 2010

Danny Alexander has been shoved front and centre to push the cuts agenda and has gleefully lit upon a handful of projects greenlighted in the final months of the Labour government, but which now exemplify the profligacy and waste of Labour. If you recall, shortly after entering government, Cameron, Osborne and Laws breathlessly rushed to tell the media of how Labour had fiendishly and secretly allocated huge sums of money to projects in the hope of shoring up marginal seats. It was never made entirely clear how a secret project would help win an election and it became apparent that many of these projects had actually been announced to the media, so weren't secret at all. These spending commitments were called in for review and today we got some of the cuts that follow. Some of the cuts are disguised as mere suspensions, but none of them appear to be wasteful or profligate use of public funds, as the coalition initially portrayed them.

The largest chunk of the billions to be hacked comes from the 'suspension' of a joint project between the Ministry of Defence and the Department for Transport to replace the ageing miltary Sea King search and rescue helicopter force and the Coastguard helicopters that supplement them around the country, which will save something of the order of £4.6 billion. This probably can be postponed, but the airframes are going to have to be replaced and the service has to be provided, so the costs will return.

Particularly battered is Sheffield, which loses a £12 million retail and residential redevelopment and a £13 million project to redevelop a former steelworks site. Most dramatically, it also lost an £80 million loan to Sheffield Forgemasters to allow the purchase of a new press to manufacture large castings for the nuclear industry. This would have allowed the company to compete in a global niche market currently served by very few manufacturers - I believe that there are only one or maybe two producers capable of casting these parts. This would have provided for a further 180 jobs with the company, injecting additional spending into the local community, rather than having to pump money into the community in the form of benefits. This loan would have been repaid, but benefit money is taxation lost forever.

These three cuts are remarkably brave, as they hammer the city where Nick Clegg has his parliamentary seat, although few workers at Forgemasters probably live in Hallam. This would appear to be a demonstration of his own loyalty to the government's cause, bravely throwing the future of other families onto the bonfire of his own vanity. Truly, it can be said that greater love hath no man, that he lay down others' lives for his career.

parts of the North-east, North-west, South Yorkshire and London would be given special help to limit the impact of job losses, with private companies in those areas given incentives to expand...

"I am as aware as anyone else of the dangers of the disproportionate impact on those areas of the country which are very dependent on public-sector employment. What you will see over the next few weeks and months is a series of measures that we are taking to ensure that, as the black hole is addressed, it's done in a way which is sensitive – much more sensitive that in previous recessions – to the particular need of those parts of the country that are very dependent on the public purse."

Words are cheap, Nick.

Just as you might think that investment in jobs and employment initiatives would be a bright move, the coalition scrap the Future Jobs Fund that has helped young people get out of long term unemployment and into a job, scrapping the recruitment subsidies and the young person's guarantee, which offered work or training places, and the Jobseeker's Guarantee that promised work training or an internship after two years out of work.

And just in time for the summer, the axe falls on free swimming for children and the over 60s, even though it encouraged more paying swimmers to go as well - as adults attended with their kids - and increased participation in both the younger and older age groups, with an impact on their longer-term health prospects and thus their likely continuing cost to the taxpayer.

Up to date as ever, I thought I'd pen a few brief thoughts on the car crash that was Tuesday evening's Newsnight hustings. Paxman really didn't keep control of the event, which was always going to be difficult with five candidates, but degenerated all too rapidly into confusion.

Although he had a shaky start, I was increasingly impressed by David Miliband. Once he got into his stride, his tendency to behave like an automaton seemed to vanish and his grasp of the issues was thorough, allowing him to put across some points quite powerfully. I've tended to favour his brother, Ed, who also had some good moments, but seemed a little weaker and unsure throughout. Andy Burnham is making up the numbers here - some of his answers on issues around civil liberties weren't in tune with the direction of the public and I'm not sure that ID cards are a votewinner again. Ed Balls was OK, quite combative, but floundered on occasion and Diane Abbott looked the most relaxed with the whole thing - all those long hours on the This Week sofa have paid off, as she was quite at home, talking to a wider audience, even if Paxman didn't really give her a fair crack of the whip.

As that was one of the few opportunities that Labour members outside London will get to see the slate of candidates in action, it was disappointing that it wasn't better chaired by Paxman. On balance, I think that Miliband D had the edge over Miliband E, who seemed decidedly lacklustre.

Wednesday, June 16, 2010

Rumour suggests that Vince Cable's rearguard defence of the Regional Development Agencies in the midlands and north has definitely come to naught and Cllr Eric Pickles has won the battle to abolish the lot.

The prospect of a local partnership dominated by the parochialism of the city council is not going to cheer the Chamber of Commerce or the wider business community one little bit. Fortunately, it looks as there will be very little money to be wasted, as we already know that the big savings only come through scrapping the investment funding, not just the administrative costs of the RDAs.

It has taken almost forty years, but the government has apologised for the lies, the spin and misinformation - intentional or otherwise - that blighted the memory of fourteen civilians shot down by soldiers who have defiled the name and honour of the Army and their country, who were badly led and uncontrolled and whose actions contributed to the following decades of violence and seemingly intractable political deadlock.

Monday, June 14, 2010

Liam Byrne appears to be writing a series of pieces explaining why we are not like other countries. This week, as the Westminster village gossip moves on from explaining why we face a Greece-like situation (we don't), it starts to explain how the British government should choose a Canada-like solution (they shouldn't). Read Liam's take on it here.

The short version is that in the mid 90s, the Canadian government executed a sharp about-turn in government spending and removed a deficit of £42 million in just four years. They did this by slashing the size of the government workforce by 20% - some 55,000 people, which would equate to Clegg/Cameron pushing some 1.5 million people onto the dole in the UK, a situation that might prove a little problematic for them.

What Cameron/Clegg fail to point out is that while the Canadian economy was being realigned, the private sector was able to make the most of a global economic boom, improved access to wealthy US markets through the new NAFTA agreement and strict control on interest rates. Our interest rates are still low and we don't have the opportunity to fill demand caused by global growth, because everyone is in the same boat. There seems to be a myth gaining traction within the Liberal/Conservative government that the private sector is being held back by government spending, rather ignoring the fact that the private sector is struggling along and is entirely unable to absorb the people who are facing ejection from the state sector.

The role of the state right now - a position maintained by the Labour Party and supported until the election by the Liberal Democrats - is to sustain the country through this tough period to allow a private sector recovery that will create new jobs for former state employees. It isn't happening. David Blanchflower was right last September when he intoned in suitable doom-laden words

The time for cutting public spending is not now, not next year and not the year after… Unemployment is going to continue to rise this year and may keep on rising … If spending cuts are made too early and the monetary and fiscal stimuli are withdrawn, unemployment could easily reach four million If large numbers of public sector workers, perhaps as many as a million, are made redundant and there are substantial cuts in public spending in 2010, as proposed by some in the Conservative Party, five million unemployed or more is not inconceivable. They could be our lost generation … It is not hard to work out that, with unemployment rising fast, it isn’t the right time to cut public sector jobs, wages or public spending for that matter.

Mr Osborne, I really don’t know which economists are advising you on this brilliant strategy to increase unemployment, but feel free to give me a call. We must not repeat the mistakes of the 1930s by assuming a recovery is taking place and then cutting spending and raising interest rates too early. Such action could push the economy into a decade-long depression.

As both Liam and Mehdi Hasan point out, the removal of that deficit caused great pain in Canada, but it also reversed performance on inequality and poverty (something that Boy George Osborne criticised Labour over), such that the OECD reported in 2008 that

After 20 years of continuous decline, both inequality and poverty rates have increased rapidly in the past ten years, now reaching levels above the OECD average.

Yet again, this is one area where I want to be proved wrong. I'd love to see 'progressive cuts' - whatever they are - that strip the fat and waste from the government bones without affecting frontline services. I just don't believe that they are possible. I'd love to see a private sector taking up the slack from government, but I can't see where these employees would go. I'd love to believe that taking a massive slice of money out of the economy will create a vacuum into which private sector growth could explode, but I don't have sufficiently powerful hallucinogenic drugs to hand.

The Liberal Democrats and the Tories are trying to scare you over the deficit. It is a problem, but it isn't the most pressing one. They want to cut the government not because it will help the economy, but because a smaller government is an ideological imperative for them and the parlous state of the economy is an ideal excuse to wield a big and bloody axe.

You should be scared, but not of what might happen if they don't cut, but of what will happen if they do.

Reports from the house paper of the Conservative Party suggest that Vince Cable's rearguard action to defend some of the regional development agencies from the axe has come to naught, as Eric 'Who Ate All the Pies' Pickles is planning to announce their annihilation before the forces of Conservatism and power devolved to local authorities in the shape of Local Economic Partnerships.

A very interesting post from Dermot Finch points out that the only way that Eric can save £2.2 billion from the RDAs (actually £1.5bn since budgets were reduced by Labour and then again by the new administration) is by scrapping all the investment that they finance as well, since their administration and overhead costs amount to just 7% of budget, with the remainder going on programmes to support businesses, regeneration, training, etc.

Quite how the business community in the West Midlands will take the abolition of an agency that has specialised in business intervention, rather than the direct regeneration seen in other regions, and is calculated to bring in £4.50 for every £1 of investment, remains to be seen.

The Local Economic Partnerships look to be mini-disasters in the making, as the big players like Birmingham will be able to dominate them to the detriment of the more remote parts of the region - like Stoke, Telford or the rural backwaters. At best, there will be functional duplication, but at worst, stasis and decline - particularly if there is no funding at all attached to these new LEP beasts.

Finally, this looks to be part of a Tory campaign to wear down Vince Cable, as the RDAs actually fall under his department, not Pickles' Local Government. Poor old Vince - this can't be what he signed up for.

Sunday, June 13, 2010

I've just not had time to sit down for over a week and do anything at all political or not related to a busy life with work and children, but for now, I have a few spare minutes to catch up.

To open, a gem from Tom Watson, who is grasping the nettle of opposition and getting on with the job, rather than choosing to gaze inwards upon our collective navel and worry about which Ed or Miliband we should choose to lead us. However, he hasn't ignored the leadership contest.

All the frontrunners for Labour's leadership are insipid-looking, clean-shaven boys from the suburbs. I can only get away with saying this because the nation knows we also have a prime minister and deputy prime minister who don't yet shave. David Cameron and Nick Clegg are mollycoddled middle-class white men whose idea of an early shift is the Today programme radio car interrupting their morning cappuccino.

This was written before Diane Abbott was forcibly injected into the leadership's bloodstream, of course, and at a point where nobody thought that either she or John McDonnell would gain enough nominations from the PLP to even qualify to stand. Even after McDonnell's stepping aside, following an ill-judged retrospective promise to assassinate Margaret Thatcher - presuming he could find a convenient time machine, obviously - the televisual Ms Abbott only made it onto the ballot thanks to some support loaned by Harriet Harman and David Miliband.

Quite aside from the image of John McDonnell being thrown naked into a car park circa 1980 and demanding 'your suit, your Austin Allegro and a mandate from the people', I'm not entirely happy with this. On the one hand, I do think that her presence in the contest will enliven debate and perhaps help keep the other candidates honest, but she is massively weakened by the fact that she could not sustain enough support amongst the parliamentary party - she was actually behind McDonnell in terms of nominations - and I have problems with her credibility as the leader of the parliamentary group. Quite aside from that, I suspect that her policy proposals might be a raging disaster area in terms of rendering us unelectable for a generation and I have no reason to wish to revisit the early 1980s, thank you very much. We can't afford that luxury and there is no mood within the party for it. We need to be ready for an electoral fight that will come at a time that we can't choose - whether we have to wait until 2015 is an entirely different matter - and we need to be able to propose policies that will get the support of a majority of the British people, especially facing the additional challenge of a remodelled political system.

So far, I've backed Ed Miliband as the most interesting of the candidates, but I want to be inspired by them. I want to feel that my leader knows where we should be heading and is able to set the right tone with the broader British public, catch their mood and take us back to power. I want to see a leader that promises to work with the broad party and not regard them solely as a resource of willing cheerleaders. We have much work to do and we need to enthuse our wider base of members and supporters - they will be the powerhouse to return us to government and remember that we are not flavour of the month at the moment, so the big political donations that fund the party machines will not be coming our way.

We need a leader who can talk to people - not the carefully-selected and managed groups who turn up at party events, but the people on the doorstep and in the street, the ones who feel abandoned by all the parties.

This is why John Prescott remains a hero. Never has the phrase "traditional values in a modern setting" been so important to the Labour party. During the election, not only did the 71-year-old husband of Lady Pauline tour the country in a transit van, he also got on his soap box and met his hecklers. How do I know this? I know this because John is also a social media sensation. He twitters, he updates his Facebook page and sends clips to his YouTube channel. He uses social media to meet real people. I've been dismayed to see how the traditional methods of spin have been applied to the social media efforts of the leadership campaigns. It's all well and good setting up fan sites and Twitter channels, but unless you use the tools to meet real people, then it's just window dressing.

We need a leader with a respect for the achievements of the past thirteen years, but with a hunger for the fight of opposition, someone who isn't afraid to take it to the Tories/Liberals and keep on pushing against the current narrative that everything is Labour's fault and that the only solution is to dismantle the state - a political position that is utter rubbish and unsustainable. We need a leader who is recognises and is able to exploit the political divisions of the next few years and can guide the policy process with the full involvement of the party down to the grassroots.

Harold Wilson said that the Labour Party is a moral crusade or it is nothing and we are certainly at our strongest when we take the moral high ground. What we need is a leader who understands the prose of governance, but can give us the poetry of the campaign trail for the next few years.

Thursday, June 03, 2010

Liam Byrne on why Britain is not Greece - no matter how much Osborne and Laws Alexander talk down the economy. Why they think that this is a responsible way for Treasury ministers to behave and precisely how they think that their statements will prove reassuring to the international markets isn't entirely clear. Fresh from his embarrassing letter to his then successor as Chief Secretary, Liam puts together a convincing case as to why we should be concerned about the deficit, but should not be in full panic mode.

John McTernan on the rather excellent Labour Uncut blog comments on the electoral prospects in Scotland, but his views also have a resonance across the country. The downturn has given the Tories an unprecedented opportunity to justify cuts in the name of reducing the deficit that may well be more inspired by the Conservative small-state ideology, one that also finds support within the Orange Book tendency which is in the ascendant within the Liberal Democrats. He suggests that it is a hard sell to make the case that Labour single-handedly caused a global meltdown, which is correct. However, the electorate seem prepared to give the coalition the benefit of the doubt, but there isn't room for many more wobbly weekends like the last if the government wants to sustain the faith of the public - their honeymoon political capital is not inexhaustible.

Meanwhile, Dizzy actually does think something and asks a pertinent question about what Nick Clegg actually does. Answers on a postcard to the usual address. John Prescott had a thumpingly large department that did things, Clegg seems to be little more than a cipher with responsibility for a limited range of constitutional and electoral reform issues - a safe sandbox where he can be allowed to play without doing anything that might upset the big boys around the Cabinet table. (HT to Bob Piper).